A recent survey of HR professionals revealed that at two of every five companies, employees believe their top managers spend too much time talking and not enough time asking questions and listening.
Employees who feel heard feel engaged. Those who don’t settle into a culture of indifference where creative ideas and critical thinking evaporate.
“Most executives understand that employee feedback is good, but in the rush of the day and because they need quick decisions, they often choose to make their decisions with limited input,” says Charlotte Baker, CEO, Digital Hands. “Snap, snap, decide and execute.”
Smart Business asked Baker why seeking a voice is not giving a vote and why speed and consistency may be the best method to gather feedback.
What are some ways that employee input can benefit a company?
Employees are closest to customers, processes, problems, opportunities and the elements that make change successful. Soliciting their input means you have current data, an intuitive pulse and many more brains thinking about the problem you are trying to solve. Soliciting their feedback is motivating for employees and productive for your organization. Ongoing discussions and feedback keep everyone rowing in the right direction. Your job as the executive is to gather the input, spot check intuitive with quantitative data, solicit great ideas that are in line with strategy and, in the end, make a decision and lead the way. By hiring smart people and trusting their insights and analysis, you can grow your company faster than you could trying to think up great ideas in a vacuum or with your power of one mind.
Are there any risks to soliciting employee input?
There is a risk to not soliciting employee input. In the executive seat, you can be removed from the details and miss the mark by overlooking what everyone else sees and lives every day. Not only can you make some really dumb decisions by not soliciting input, you also can demotivate and alienate your employees.
If executives realize the value of employee feedback, why doesn’t everyone jump on the opportunity?
The three main reasons for not jumping on the opportunity to get the feedback are noise, obligation and time. Feedback from everyone creates great ideas. Some unusual ones, too, but you just never know when a crazy idea will lead you to a stellar one. And the patience for sifting through the offbeat ones can be nonexistent.
Some executives hesitate to solicit input because they believe there is an obligation to act on it. There is not an obligation. A business isn’t a democracy. By making it clear that you are seeking voices, and that it isn’t the same as giving a vote, you can avoid potential disappointments. The truth is, if you make it part of your culture, it will become an anticipated and pleasant method for decision-making within the organization.
What are the solutions for getting feedback from employees?
My favorite way to track and solicit feedback is the fast way, with constant daily conversation and finger on the pulse conversations. Doing this consistently over time means it becomes institutionalized and expected. Once the institutional norms are set, there is no need to give orientations to a process, backgrounders, written responses, etc.
The solution to this is to pick your feedback captains who, in turn, have their own go-to sources. This works in any size organization. Develop these captains as trusted confidantes with whom you interface daily. When employee ideas are truly exceptional and are put into practice, celebrate and give credit. Proper recognition of thoughts and ideas is important in order to keep the river of ideas flowing, because you do not want to stifle your employees by forgetting to acknowledge their contributions. By adopting a daily conversational way of bouncing ideas and soliciting feedback, you can accomplish the goal without ever having to formalize a time-consuming institutional system, and your team will feel as if it is an integral part of the process without needing constant reinforcement for doing so.
How can leaders communicate with employees about why certain decisions are made?
Honestly. Tell them what factors were weighed and share with them why you chose your decision. Recognize the strength you have as an organization due to their willingness to share ideas and try again and again to help make the company the best it can be. Finally, let them know your final decision, your confidence in their cooperation and the expected results.
CHARLOTTE BAKER is the CEO of Digital Hands in Tampa. Reach her at (813) 222-3022 or firstname.lastname@example.org. Digital Hands is Tampa Bay WorkForce Alliance’s 2008 Business Excellence Award Recipient in the Emerging Business Category.
Digital Hands, Tampa
The U.S. Small Business Administration (SBA) has been loaning money to Americans to start, build and grow businesses since 1953. However, many business owners may not realize that these loans do not require a lengthy approval process or a long-distance relationship with a faceless loan processor.
Through its Preferred Lender Program (PLP), the SBA grants some banks the authority to underwrite and approve loans for small businesses. And while borrowers must qualify, SBA loan authorization can take as little as 24 to 48 hours, which is great news for small business executives, given the current lending climate.
“Preferred lenders have full authority to underwrite and approve government-sponsored SBA loans because they are charged with looking out for the SBA’s interest,” says Albert Lee, vice president of Business Banking for Fifth Third Bank, Tampa Bay. “SBA loans were designed to facilitate access to credit for businesses that might otherwise have trouble securing funding.”
Smart Business spoke with Lee about why SBA loans are a viable option for business owners.
What types of business loans are available through the SBA?
Business owners can receive funding to grow or expand their business, including purchasing equipment, property, making leasehold improvements or just meeting operating capital requirements through the SBA’s loan program and portfolio of loan products. The SBA’s 7(a) loan program, for example, has a maximum loan amount of $2 million. Sometimes new companies don’t have a lot of assets or collateral to borrow against, so this program was designed to help those companies succeed.
What are the qualifications?
In some respects, the term ‘small business’ is misleading, because a company can qualify for one of the SBA loan programs if its after-tax income is less than $2.5 million or its tangible net worth doesn’t exceed $7.5 million. There are at least 1,200 businesses that fit that profile in the Tampa Bay area. Applicants must meet the bank’s lending criteria, and business owners must not be under indictment or on parole or probation. Other qualification criteria include loan size, type of business, use of proceeds and the availability of funds from other sources.
Is there a business ownership requirement for borrowers?
The borrower is required to have a cash investment stake in the venture. The SBA has a minimum requirement of 10 percent equity, although the local bank’s loan requirements take precedent, and those will most likely require the borrower to have 20 to 25 percent equity ownership in the business or even a higher amount.
How does the loan approval process work?
Business owners may apply through their local bank. A checklist is available that outlines the necessary documentation borrowers must furnish, and there’s also an eligibility questionnaire that helps borrowers gauge their ability to qualify. After the borrower completes the application, the local banker underwrites and approves the loan, using the bank’s lending criteria, and then submits the package electronically to the SBA. Authorization is usually issued within 24 to 48 hours, after which the banker will put together the loan terms for the borrower, including how the funds will be used. If the business needs to use the funds for a different purpose down the line, the banker has the authority to modify the loan documents to meet the business need.
How do SBA loans differ from traditional loans?
In theory, the SBA does not decline loans based upon a lack of collateral, whereas traditional loans require the borrower to demonstrate sufficient cash flow and collateral and execute personal guarantees. SBA loans do not necessarily have to be fully collateralized as long as any and all available collateral has been offered. The term of the loan is driven by the use of the proceeds, although the lending terms can be stretched to accommodate a longer time period than most conventional loans.
Historically, SBA loans have been unfairly characterized as cumbersome, when, in fact, the SBA loan process has become very user-friendly. Today’s process is highly streamlined and banks have authority to meet the needs of small business owners without the red tape.
ALBERT LEE is vice president of Business Banking for Fifth Third Bank, Tampa Bay. Reach him at (813) 306-2414 or email@example.com.
Rob Kornahrens is in the roofing business, but it’s the bricks — his 400 employees — that keep Advanced Roofing Inc. standing strong.
To make sure he hires staff that can uphold his company’s 26-year reputation, Kornahrens approaches the hiring process with keenness and intensity. The founder, president and CEO starts with behavioral profiling, and after people are hired, he keeps them on track through a rigorous annual review process.
After all, how do you grow a company you started with a $15,000 loan from your father in 1983 to the No. 6 roofing contractor in the nation in 2007, according to an industry magazine?
“You do it through people, through processes, through culture,” Kornahrens, whose company posted 2007 revenue of $75 million.
Smart Business spoke with Kornahrens about how to hire employees who will meet and keep the standard you’ve set for your company.
Separate hires from their personal lives. Obviously, you’ve got to start with resume selection. I
generally look for stability in a person’s life. I know some people get into bad situations, but if I’ve got a resume with five jobs in seven years, it doesn’t go to the top of the pile. I look at resumes for stability.
I appreciate honesty. I’ve had people be honest with me, ‘Hey, I was going through a divorce and this is what happened.’ Something happened in their personal life, something bad, and they had to move on, and they get it straightened out. Things happen to people, and you’ve got to be open-minded and fair with people.
Don’t have a direct manager make the hire. I rely heavily on the interview process, bringing in a couple people to interview. We generally use the manager-once-removed philosophy, which is, if you need to hire somebody for a position, it should be the manager that’s one up. If you allow the manager to do the hiring, in some cases, they’ll overlook somebody that’s better than them.
If we’re hiring a person to be a business development person, I’ll get involved in that rather than just having my head business development guy do the interview himself. Not that I don’t trust the guy, but you want somebody that’s over the person doing the hiring so you’ll get a better hire.
Sometimes they feel threatened if somebody really good comes across in front of them. People have a tendency to fear for their jobs a little bit.
Hire a variety of types. We do personality profiling and behavior profiling. My belief is 90 percent of people repeat their behavior from previous jobs. You’re interviewing and you have had them already take some profiling, and you’re able to figure out what the behavior’s going to be after you hire them.
You look for things and then you drill down on specific cases of experience and not just theoretical questions.
We use an outsource service that’s online. There are questions that steer you to stability. The one profile is called DISC [dominance, influence, steadiness, conscientiousness]. So if we’re looking for somebody
that’s detail-oriented and steady, their personality will come in as a high C high S. If you’re looking for a salesperson, we’re looking for somebody that’s a little more I. I’s are people persons. A D is a ‘get it done, don’t get in my way’ type of person. You need those. Not that any one personality profile is right,
because there are strengths in all of them and weaknesses.
These profiles give you do’s and don’ts for communicating. If they need to talk to Joe Smith, and Joe Smith’s a high D and this other person’s an S, you know you’ve got to deal in facts and talk to them in a certain way — great communication tools once you hire them on.
Keep good hires on track. We use an annual review — the 360 tool. The idea is if I’m evaluating somebody, I get somewhere between six and 10 people that work with this person, not just the person’s boss.
That’s the old conventional way, doing a review and filling a form out. That’s one person’s opinion on how that person’s doing. A 360 is anonymous so people can pretty much say what they really feel.
We sit down with everybody once a year and do that. You’ve got to explain that if one person says something, it might have been a bad day. It’s not that important.
If two say something, they’ve got my attention. And three, there’s something either to build on, because we look at strengths, and then we also look at opportunities for improvement. What are you going to change after this review? Do you want to go to a leadership course?
You’ve got to tell the person, ‘Five people say you’re condescending when you’re talking to people. What are you going to do to make yourself more aware that you’re doing that?’ You do a lot of questions on
what they are going to do about it, not how I’m going to fix it for them. They need to fix it.
Say someone doesn’t have good listening skills. So you’ve got to say, ‘OK, how can you improve your listening skills? Why don’t you make believe you’re Columbo? And rather than not letting the person finish and you not listening, ask questions.’
Listening has to improve when you ask someone a question and they’re responding.
How to reach: Advanced Roofing Inc., (800) 638-6869 or www.advancedroofing.com
You’ve narrowed down potential employees from a number of qualified applicants. Next, you want to make sure you make the right choice when it’s time for the final selection for a vacant position. There are a number of different personality and skill-set tests available to help employers with the evaluation process to ensure that a candidate is a good fit for your environment.
“Building a stronger work force starts with the hiring process,” says Tarelton Cherry, workforce services manager at Tampa Bay WorkForce Alliance. “Perfecting your hiring process ensures that your company finds the best suitable candidate for the job.”
Smart Business spoke with Cherry about how comprehensive interviewing and selection techniques can lead to putting the right people in the right positions.
Why do many companies seem to have an ineffective hiring process?
The primary focus is often on past experiences and talent, not so much on whether the person is the right fit for the organization. Too often, the hiring process ends at the interview with the wrong candidate being hired for the position. A resume and interview alone cannot accurately predict success on the job. The candidate may have impressive experience but could come from a company with a completely different corporate culture or conflicting leadership style. The candidate could have trouble adjusting, which would create a lower level of performance than expected.
Why is it essential to use multiple screening methods?
According to Background Information Services, it costs an employer $15,000 when it hires the wrong person for a low-level position, including training fees, recruiting costs, and money spent replacing a dismissed worker and training the replacement. The cost is even higher for an executive.
What are some important aspects of the hiring process?
The hiring process should evaluate both job skills and personality. Skills-based or job-knowledge tests have consistently been proven to predict success on the job. Just as important as the job skills of a candidate is the ability for that person to synthesize with the culture of the company. Employing a personality test during the application process will give you a comprehensive look at the psyche of the candidates. Do they thrive in a high pressure environment? Do they prefer independent work or group environments? Are they accustomed to a greater workload or less? Understanding a candidate’s personality is a good testing measure for adaptability and productivity within an organization. If your office requires independent workers, then someone who especially thrives in a team environment may not be the best fit. No matter what, do not underestimate the importance of a good job fit.
Conduct a careful background check to not only protect your company but also for experience verification. There is a fairly high percentage rate of false information presented in resumes and job applications. According to a study conducted by the Society for Human Resource Management, a majority of applicants stretch the truth on resumes. More than half, 55 percent, lied about the length of past employment. While it takes extra effort, thoroughly verifying critical information almost always results in avoiding problems on the job. Digging deeply into a candidate’s work history also gives you more details as to his or her passion. Inquire about situations where the candidate excelled in the past, which job or jobs gave him or her a chance to shine and what special achievements received recognition. This should help you assess whether the candidate’s passions match the position you are trying to fill and whether he or she has a high probability of success with your company.
What is especially crucial to remember during the final stages of the interview process?
While in the final stages of the interview process, remember that courtship is still a vital professional courtesy. The last thing you want is to expend valuable time and resources on a candidate to have him or her withdraw because the person perceived he or she was not properly courted in the process. Demonstrate the value the candidate would bring if selected.
What resources are available to help employers discover key information about potential hires?
Apart from the aforementioned skill-set testing, personality tests and background checks, remember the power of the Internet. New media provide a wealth of information on candidates. There are myriad social networking sites that can provide extra background on the personality and passion of the candidate. MySpace, Facebook and Friendster are excellent sources to discover the candidate’s personality. Professional social networking sites like LinkedIn, Plaxo and Ryze can offer in-depth background on a candidate’s passion.
TARELTON CHERRY is workforce services manager at Tampa Bay WorkForce Alliance. Reach him at (813) 930-7862 or CherryT@workforcetampa.com.
Much has been studied, discussed and written about the personal and professional development of the next generation. With seemingly much more structured developmental programs available, this group is also the product of the technology boom that has expanded its informational reach and its almost constant stream of communication. So with these newfound skills, how are young professionals assessing career choices?
“Without question, there are a number of factors in play, starting at an early age, that serve to develop a sense of interest, priorities and expectations,” says Matt Baldwin, a multihousing specialist with CB Richard Ellis in Tampa. “Many of the young people of today have the advantage of being exposed to a much more diverse spectrum of people, places and opportunities than perhaps our parents. With that, we see a broad base of possibilities. However, the journey in many ways also serves to reinforce the fundamentals of previous generations that interestingly become increasingly important.”
Smart Business spoke with Baldwin about his development and path to a commercial real estate career.
What were the factors that started to shape your future ambitions?
Well, certainly my parents and family are at the very core of my personal development. Education was always a key fundamental, and we were competitive at just about everything. Along the way you begin to measure yourself against the increasing universe of people around you. Academic achievement is very qualitative in structure and measurement. Athletics are similar in that success or failure is easily benchmarked. Both serve to fuel the competitive instinct while also making clear what work needs to be done to achieve personal goals. I feel fortunate that both my educational and sports experiences gave me the confidence to put few, if any, limitations on myself.
Was a career in commercial real estate an initial goal?
Actually, no. My initial attraction was for the banking industry, which I saw as the common element behind every business venture. The ability to look at various scenarios and address the capital structure led me to a position with a large institution firm. While I enjoyed that experience, it became apparent that the industry was very structured in approach and career path. At the same time, the information and technology community was exploding. Like many my age, we saw a very fluid environment and one in which seemingly unlimited opportunity was producing incredible wealth. My second stop was with one of the best known information search platforms.
How did these opportunities reinforce or challenge your career path?
While both were very satisfying in many ways, the dynamics of the ‘real world’ also began to shape both my personal and professional life. As friends married and started families, I saw yet a new set of priorities as well as the challenges of balancing both family and career. Measurement of success was now more aligned to those who had a lifestyle that wove health, family, career and community together. When that combination was right, life seemed enriched. On the other hand, when it was not, it was apparent that the toll was heavy on the individual as well as the family. The expectations and even a sense of entitlement that is created in the academic environment were certainly challenged by the many factors that can influence one’s perspective and decisions.
Does commercial real estate now meet your expanded priorities?
I believe it really does. First, while there are certainly no short cuts to dedicated effort, this business offers a degree of flexibility that allows me to govern my day to a large degree. This gives me the ability to adjust, be it for a client’s needs or for a personal matter. On the personal side, this is very important to my wife and me as we have interests and friends that we enjoy together. On the professional side, results are only limited by your own effort and of course the cyclical market conditions of the time.
Additionally, the learning process is ongoing. While there is certainly some redundancy in process, every transaction brings its own unique characteristics to the table. This continuum allows me to build on my past base of experience while looking forward to the energy of a new challenge. So be it personal or professional, while much has changed for the next generation, many of the fundamentals remain the same. Collectively this all contributes how we view and contribute to our community. I truly think we will all benefit from the best of each generation.
MATT BALDWIN is an associate with CB Richard Ellis’s Private Client Group specializing in multihousing. Reach him at (813) 273-8458 or firstname.lastname@example.org.
In his first nine years with Family SportsConcepts Inc., Nick Vojnovic watched the company’s Beef ‘O’ Brady’s restaurant chain grow at a tremendous rate.
What started out in 1998 as 30 locations, primarily in the Tampa Bay area, and $16 million of revenue, had increased to 250 sites nationwide with revenue of approximately $200 million by 2007.
But then the company hit a snag.
Beef’s, as Vojnovic refers to it, started experiencing tremendous commodity increases because of rising ethanol and fuel prices. Aside from the business having to spend more money to pay for supplies, those rising fuel prices are also driving people to enjoy some home cooking instead of eating out and Vojnovic, who became president of the organization in 2005, was hearing all about it from his franchisees.
“We are seeing pressure at the store level where they go, ‘Nick, I’m working just as hard, and I’m not making as much money,’”he says. “We, as a franchisor, have to lead that way and make sure they are making money and make adjustments.”
Because a lot of the company’s success is dependent on the franchisees making money and being happy, Vojnovic and the management team knew it was time to make some changes.
They decided to re-evaluate parts of their company’s brand and concepts to continue the kind of growth they’ve experienced and that meant trying new things.
One of those changes involved serving some liquor at the restaurants. There was some worry that expanding from beer and wine to include serving mixed drinks would turn the family-friendly Beef ‘O’Brady’s into a scene out of “NationalLampoon’s Animal House.”
“Our core customer is mom and dad with the 8-year-old or 10-year-old coming in after a soccer game,” he says. “We certainly do not want a bunch of 24-year-olds at the bar trying to pick up chicks, getting hammered and cussing.”
Though Vojnovic did not want to alienate the customers that made the company a success, he was willing to try to change while still keeping core customers satisfied.
“You’ve got to keep changing,” he says.“You cannot keep doing what you have always done. At the same time, you cannot lose that core, or you cannot ever alienate your core customer, or you could possibly go out of business.”
Research the change
Initially, management was dead against serving full liquor in the establishments. The leaders were so against it, they tried shutting down the franchisees who were already serving it without permission.
However, management was also hearing from some franchisees that they needed to serve some form of liquor in order to compete in their markets.
To drive any change and continue to succeed, you need to listen to other’s opinions.
“The one thing I have learned is that it is very important to get different perspectives and different viewpoints,” he says.
They decided to do some formal, controlled research to find out if serving liquor would offend their core customer base. They want to be able to cater to the family coming in after a soccer game, but they also don’t want to lose the mom or the golf foursome that wants a Bloody Mary.
Beef’s hired a consultant company who had previous experience in the restauranti ndustry to help them survey 1,300 customers in about 10 stores across the country.
“We only hire (consultants) if we are trying to find something out,” he says. “Wewon’t do just a general, ‘Tell us about Beef’s.’ Generally, it’s very focused, and we do it when we feel we have a particular issue we want to address.”
The management team would work with the consultant team on what they wouldwant to find out because the consultants were very good at forming the question ina way that would solicit the best answer.
“You know that they can word questions certain ways to get certain answers,” he says. “You want kind of a clean question that doesn’t really lean one way or the other.”
Customers were asked to fill out a survey and were given an incentive, like a free dessert, for completing it.
Surveys are kept to about 10 to 12 questions because any more than that may lose someone.
“On the phone, and even in person, thereis only so much people are going to put up with before they go, ‘Unless you’re paying me, I’m done,’” he says.
Normally, Vojnovic finds when gathering information for a change, you want to ask specifically about the change and keep the research focused.
However, in this instance, they were actually surveying about something else, and added the liquor question at the end.
“We threw the alcohol question in there because we had partners kind of pushing us for it, and we wanted to show them with the research that you shouldn’t do it,” he says. “But the research actually was the opposite.”
The results showed 91 percent of those surveyed said they would come to Beef’smore often or the same amount they had been coming.
“The research kind of gave us the light bulb moment that maybe it’s not as a bad as we thought; maybe it’s not that big of a deal for folks,” he says.
Aside from surveys, Vojnovic did a little investigating of his own the old-fashioned way to really make sure the change was worth a test run. He would visit restaurants himself and ask the customers directly about the possible change. Through that research, he found the same opinions expressed in the surveys.
“I’m all about (being) in the stores,” he says. “I’m all about talking to customers, talking to owners, and I’ll just start asking hundreds of people, ‘What do you think?’ It’s anecdotal, but sometimes you start getting a sense. And I came back we havean executive meeting once a month and we have very robust conversations. I said, ‘This is anecdotal, but I’m not getting a lot of push back on this deal. I’ve only had one person out of probably 100 people I’ve talked to who even had a little bit of an issue with it.’”
Test the change
After all the data was compiled and it validated that serving liquor might be worth a trial run, it was time to put the data to the test.
“You never just do things without testing them first,” he says. “It’s weird, but sometimes the littlest things can throw you out of whack.”
The North Richland Hills location was chosen to be a one-store test market last October because it struggled in that market and management felt liquor might have been a factor. It was also isolated from other Beef’s and the company leaders wouldn’t have to worry about other customers going to a nearby Beef’s and asking why they couldn’t get the same drink.
In addition, a big part of choosing the location was they could trust the person running it. They trusted her and felt that she would rollout the program properly, wouldn’t start serving shots, and would give all of her sales data and check averages.
When the results showed sales were up and there weren’t any unruly drinkers driving their core customer out of the place, they decided that testing a second store a few months later would be a good idea
But before testing the second store, Vojnovic wanted some morefeedback and wanted to hear some different perspectives, so he briefed the organization’s advisory board, which is made u p of a diverse cross section of franchisees from across the country. He has several boards for different things within the organization, butno matter what the subject, he wants people who won’t always agree with him and tell him what he wants to hear. To get that, he has a mix of older franchisees and some who haven’t been involved with the company as long.
“I think boards are a tremendous asset,” he says. “If you can pick a diverse board that’s going to give you good critical feedback that you actually listen to them is a huge asset to any leader.”
The board also keeps the leaders in check when making a decision.
“So we aren’t making decisions that don’t sync up with what the franchisees (want) or at least have an opportunity for the franchisees to say, ‘No, that’s not going to work,’ or, ‘Why are you making me spend money on this thing we really don’t need?’ So, that is the mechanism we use to help police our decisions.”
It was agreed to try serving liquor at another location but to keep it quiet and see how it worked out before announcing it company-wide.
“A lot of times, we’re doing a lot of different stuff tests, smallscale, but we won’t tell anybody until it looks like it might go,” he says. “Because there’s no sense in saying, ‘OK, we are testing liquor; it didn’t work, so we aren’t testing liquor.’
“Normally, you run the test, and then if it looks like it might have some traction, that’s when you start running it by different groups to see how they feel.”
Beef’s eventually tested about 10 stores in different states. “We’ve really tried to make it pretty broad-based,” he says. “One thing I’m also finding out is that this is a big country and people are very different.”
While the test locations were important for the company, so was the amount of time to conduct the study. The company chose to test for a year to get a good sense of how the change will affect it.
“You want to lap sales,” he says. “In our industry, you’re always checking what’s called comp store sales. You’re comparing store sales from one year to the next. It’s hard to say, ‘Well, Nick we were up $200 compared to last week.’ Well, last week, something was going on.
“But, if I compare consistently over a year ago, then I could see for instance North Richland Hills is up 18 percent over a year ago.That’s good data,” he says. “You want to compare apples toapples.”
Although, the company wants to test about 25 locations before making a final decision, results of the change look promising so far. Along with the North Richland Hills store showing an 18 percent increase in sales, the other stores that have been tested are up 3 to4 percent in revenue as of July.
More importantly, Beef ‘O’ Brady locations aren’t turning into the home of raucous college parties, and that helps get buy-in across the organization.
The owner of the North Richland Hills location is now a strong proponent of serving liquor because she has seen it helps sales but doesn’t hurt the brand. She can now tell other franchisees, who may have been hesitant about the change, that it is a good idea. That wouldn’t have been possible without testing the change out in a formal manner.
“When they hear it from us, they might not believe it,” he says. “But, when they hear it from a partner, they go, ‘Wow, this is the real deal.’”
HOW TO REACH: Family Sports Concepts Inc./Beef ‘O’ Brady’s, (813) 226-2333 or www.beefobradys.com
It has been more than a year now since the initial effects of the subprime melt-down began to encroach on the broader capital and credit markets. The result has caused concern, raised questions and certainly peaked the level of anxiety in the commercial real estate sector.
“There are certainly more questions than answers in the market right now,” says Ray Sandelli, senior managing director for CB Richard Ellis in Tampa. “The issues we are dealing with today are subject to larger, external factors and, subsequently, the complexity of the problems and the possible solutions have become more challenging. Our potential, and our risk, as a business community are no longer confined to Tampa’s geographical boundaries. We are part of the global economy and must understand and consider how those external factors affect decisions we make locally. The importance of partnership, at every level, is therefore critical to the path we take going forward.”
Smart Business spoke to Sandelli about the importance of how clients, service providers and communities must work together to a common end.
What challenges are facing today’s commercial market?
Let’s always start with the fact that the common goal of all businesses is to serve their current clients well, expand the enterprise and run as efficiently as possible in the process. That alignment allows for clarity of purpose among all the parties involved. As economic conditions allow this scenario to play out, everyone is moving in a positive direction.
The challenge in today’s market is that the downturn in the global economy, caused but multiple issues, has forced businesses to take alternative paths to how they address both their clients as well as their own needs. A reduced revenue picture means a more monitored approach to expense management while attempting to maintain the quality of service provided. Simply put, trying to do more with less. This scenario, however, is not unique to commercial real estate. Virtually all sectors, both private and public, are dealing with the same issues.
Do these conditions change the expectations among the parties involved?
A few years ago when the markets where very active, or perhaps overheated in hindsight, everyone was simply trying to keep up with the volume and pace of activity. The expectation then was to address as much of the demand as possible. Decisions where typically made very quickly as market conditions where changing almost day by day.
Today, that process is much more deliberate at almost every level. As such, all parties must be more involved in a longer-term strategic partnership with one another. For property owners, the near-term goals are to retain their key clients, ensure they see every potential opportunity in the market and seek improved operational efficiencies in running their property. At the same time, these same owners and investors continue to look for those opportunities that will allow them to expand when conditions are right. For tenants, near-term decisions are based primarily on either direct costs or making decisions that position them for greater efficiencies long-term. While expectations may differ, the common theme comes down to each party gauging current needs while ensuring it is positioned for expected growth as the economy regains its strength.
So how must the commercial market respond?
We must think globally while staying attuned and responsive to local market conditions. To start, the partnership and interaction of the public and private sectors is essential. Success can only be assured when there is the will for a cooperative vision and agenda.
Secondly, it is imperative that the process brings a seamless team of expertise to the table. The days of the generalist are gone. Not only are very specific skill sets needed but it is critical that the parties know how their contribution relates to the overall solution. As an example, quality appraisal work will help substantiate the placement of debt and equity. The right financing vehicle will allow the development community to respond to demand with a product that is economically and operationally feasible for all parties. In turn, this helps create a quality business climate that positions Tampa to compete favorably for job retention and growth.
It’s all tied together; it is partnering in vision and purpose. The importance of thoughtful collaboration is essential in crafting long-term goals while working on solutions to near-term needs.
RAY SANDELLI is the senior managing director for CB Richard Ellis in Tampa. Reach him at email@example.com or (813) 273-8450.
It may have happened about 15 years ago, but Martin Hillertells it like it happened yesterday.
He was on a plane with a man who was, at the time, a CEO ofa major grocery chain.
Hiller wanted to know why the CEO’s grocery store was better than other stores in which Hiller had shopped.
The CEO didn’t just give Hiller some stock answer; he illustrated it: “At that other store, that brand X you’re talking about,they tell their employees that they’re going to paint by numbers. You’re going to put paint A in this box, B in this box, C inthis box.’”
The CEO explained that while that method would guaranteeyou get a picture every time, it didn’t leave any room for greatness.
The CEO told Hiller: “You’re never going to get a masterpiece. Atour company, we believe in giving the team members the paint, thebrush, the easel and the platform to create masterpieces. We get alot of really bad pictures. But, it’s worth it for the couple of masterpieces.”
After hearing that, Hiller, now president of The Hiller Group Inc.,a provider of branded general aviation fuels and specialty carbonproducts, decided that’s how he wanted to lead his company. Hewanted to empower employees to make decision and create anenvironment where employees are free to come forward withideas.
“It was like, yeah, that’s the kind of company I want to have,”Hiller says. “I don’t want to have one that people feel like they’rerobots doing monotonous jobs where no one cares.”
As a result, he built a company with an open culture that wasmission- and vision-driven to maximize growth, and it worked wellthrough the years, including recently. Revenue increased from$135.3 million in 2006 to $157.4 million in 2007.
But earlier this year, Hiller decided to make a change. Being mission- and vision-driven was working fine, but it was time to takethe company to the next level. So he changed The Hiller Group tobe driven by four guiding principles.
“I don’t think we were broke before,” he says. “I thought it wasworking well. It was just wanting to raise the bar of expectations.By having four easily understood and deployable concepts, if youwill, or guiding principles, it became one where everyone wouldrally around it. There wasn’t tension, and concern and stress about,‘Jeez, next time I’m down and Marty’s in my office, do I have torepeat my mission statement?’”
Start with an open culture
Before even thinking about developing guiding principles to takeyour company to the next level, you need to have the right kind ofculture in place to succeed.
“If I had to change my title around from owner or CEO, I wouldpick manager of culture,” he says. “I think that’s the most importantfactor in business because it lays a foundation for everything elsethat you do.”
While each company can have a different culture, Hillerdescribes his company’s as a collaborative culture where peoplecan express their opinions. One way he established that type ofenvironment was by having, once or twice a month, Fun Fridays,which has each department rotating responsibilities for the day.They’ve done things like celebrated Chinese New Year as well ashired a masseuse.
“It’s just a little bit of time to sit down and meet each other,” hesays. “We have a real great lunchroom where a lot of the discussions go on and there’s a lot of sharing there.”
Hiller found that by having each department responsible for aFun Friday activity, it makes each department want to take pridein its idea and creates some competition between departments.
“They want to make theirs be the most fun for that time, and it’sworked out really well,” he says.
On top of being a reward for working hard, Hiller says the FunFridays also increase the company’s productivity.
“It’s kind of like, if you did a time motion study, how hard do youwork just before you go on vacation? You’re just cranking, tryingto get those e-mails out because you don’t want anything on yourdesk you can’t handle because you just want to go on vacation andjust enjoy yourself,” he says. “That’s the kind of momentum building toward a Fun Friday. You can’t operate at 130 percent of capacity all the time, but maybe you can operate that way ahead of thatFun Friday, and it’s really a pressure release valve on stress.”
When it comes to employees possibly taking advantage of a culture like Hiller’s, he says it’s always a possibility, but he wants togive employees the benefit of the doubt.
“I would rather live in the moment, than try to manage for theexception,” he says.
Overall, you need to look at your company’s culture with an unbiased eye before forging ahead with guiding principles.
“I think the first thing I would recommend anyone doing is makea serious assessment of their own culture, and I don’t know thatyou can go from a challenged culture to what I believe is a collaboration culture in one step,” he says. “It was easy for us becausewe were pretty close. So, my recommendation would be to reallydo a self-assessment of, ‘What culture do we have at the company.Is it optimistic? Is it pessimistic? Is it nurturing? Is it autocratic?’From there, that drives the other processes if you are trying to getto that kind of assistance.”
Involve employees in discussions
With the culture well established, Hiller didn’t just meet withhis management team and throw out four ideas they felt thecompany should follow. All employees were involved in theprocess through departmental meetings as well as full company meetings.
Through this process, Hiller found that every department wasin a silo and didn’t see other departments’ perspectives.
Involving all employees in this processallowed each department to see how different ideas for guiding principles affected each department.
“By pulling everybody back in, we startedto merge all that together,” he says. “Wewent in and said to each one of thosegroups, ‘Give us what are the critical success factors for guiding principles. Whatshould we do?’”
The answers came back differently fromeach department. Accounting would comeback with number-driven metrics; marketing would come back with all the greatideas the company should do, while otherdepartments came back with differentdynamics.
“So, when we took all those and put themall up on the board, the look on everybody’s face was like, ‘Wow, that’s not aguiding principle in marketing at all,’”Hiller says.
“Someone in accounting would look andgo, ‘I don’t see that as being a driver or away that we should conduct ourselves inaccounting.’ So, by molding them togetherand facilitating a lot of discussion, wecame up with some pretty cool ones.”
What they ultimately settled on weresafety, respect, reputation and efficiency.
Discussions also centered on driving thecompany’s current success and how togrow in the future. The answers could rangefrom products to sales training, but withoutguiding principles, none of that is possible.
“That future success breaks once you arenot safe, the minute you don’t haverespect,” he says. “You can have a greatstrategy that may make a financial return,but if it’s going to harm our reputation,cause that customer to not be respectful ofus, is that really a future success?”
Hiller says the company started a lot further away from what ended up being thefour principles.
“You’ve got your personal perspective,then you’ve got a department perspective and then you have a managementperspective, and all those were a littledifferent,” he says. “So when we gotdown to the final ones, what we foundwas everyone goes, ‘Oh yeah, that makessense.’”
The company also flirted with havingmore than four or having subcategoriesunderneath the four principles.
“One of the principles thrown out wascompounded growth we should alwaysgrow should be a principle,” he says.
“Well, look against those other fourand tell me where to put that in. Am Igoing to grow against respect? No. If Ihad compounded growth, but it affectedany of those four, would I do it? It gotdown to, anything else that you add tothis, at least in our minds, affects thosefour, and we think those four are themost important. Clearly, we’ve had abunch of growth. Everybody was looking at that and saying that’s success, andthat is true, but it’s not successful if it’snot sustainable against what we wouldbelieve to be our guiding principles.”
Implement the principles
After developing the guiding principles,Hiller needed to implement them throughout the organization and get buy-in.
He drafted a guiding principles document to be distributed to all employees.Because he is expecting his employeesto buy-in to the culture and principles,he stressed in the document he will bedoing his part, as well.
“I am going to always make my team-mates feel special,” he says. “I’m going totreat them as individuals, not as objects.We’re all part of the same team. We justhave different roles.”
Hiller also put in the document thathe’s never going to lose sight that thestrength of the chain is founded by thebond of the individuals.
“Meaning that I’m willing to work to fixthe process,” he says. “I don’t know anybody that comes to work that says, ‘I amjust going to not perform today. Today isthe day I’m going to do everything bad.’
“So, to our mind, which is clearly an optimistic viewpoint, we believe that whatwe’re going to do is we’re going to alwaysbelieve it’s a process problem until weidentify that it isn’t. We’re going to workto fix the process. If it becomes a behavior problem, then we are going to try andsit down and talk and identify what arethe drivers behind that. If the behaviorproblem works against our guiding principles, then it’s nonnegotiable. If it’ssomething else, then we try to workthrough it.”
To get buy-in for the guiding principles,you need to involve employees early inthe development process.
“The first thing would be to be able tohave the senior management or ownership team lay out a vision of where thecompany wants to go,” he says. “Then,lay out a success plan that says, ‘If wecan adopt some principles that help usget there, would you agree to help me dothat?’ Then you start to look at that andbuild that out.”
Leadership also has to be behind theprocess 100 percent.
“For me, the leadership has to committo excellence,” he says. “You’ve got to becommitted, you’ve got to be responsible,you’ve got to be inspired. For the teammembers, they’ve got to agree to be collaborative and have a culture of caring supportive. Then you start workingwith your products and building that outand going with that. So, you say, ‘This iswhere we want to go; this is how wewant to be. What products can we represent or manufacture or sell that will helpus get to our vision against this set ofdynamics or guiding principles.’”
HOW TO REACH: The Hiller Group Inc., (800) 544-3835 orwww.hillergroup.com
It seems perhaps the toughest questions to answer in Tampa Bay’s commercial real estate market are: Where can I invest, and at what price?
“Over the last several years with abundant and variable financing alternatives available, demand was so strong that many opportunistic sellers went to market with no set price,” says Dale Peterson, Senior Vice President, Investment Properties Group, at CB Richard Ellis. “Comparable sales data was changing so fast it was often difficult to assess day to day exactly where market value was. Competitive bidding many times forced investors to stretch pricing beyond historical comparable sales and accept lower yields to win deals. Today, the metrics are much different so answering the questions of who will sell, who will buy and at what price provides a new set of challenges.”
Peterson notes that the dynamics of today’s capital markets have far-reaching effects. Investors at every level, whether they are sellers or buyers, foreign or local, are searching to establish a benchmark for value as they continue to seek investment in the Tampa Bay market.
Smart Business spoke with Peterson about the issues affecting investor decisions today and what the market can expect looking forward.
What factors led us to today’s commercial credit market?
The initial recognition that the credit markets had been too aggressive in risk assessment led to the onset of the credit lockdown, or ‘crunch’ as it’s better known, in the fall of 2007. This had a dramatic impact on existing transactions in process at year end and has carried over into the first half of 2008. Loan spreads widened very quickly and rating agencies subsequently downgraded existing debt obligations creating an immediate shift in bond values. CMBS lenders were left with billions of dollars in unsold mortgages on their books as bond investors demanded more yield. In response, aggressive assumptions were challenged and underwriting standards became highly scrutinized. One key result was that the highly popular and widely available interest-only, fixed-rate conduit loan vanished.
How have these changes affected overall investment activity?
While interest in investing in the Tampa Bay market remains strong, there is no question that the change in today’s capital markets has provided noted challenges. For the first time in a number of years, buyers began to reassess their intended acquisitions and started to renegotiate or ‘retrade’ on pricing. Cost and availability of capital had changed significantly, affecting projected yields. As such, many offerings failed to achieve acceptable bids and disappointed sellers chose to pull the properties from the market as opposed to a deeply discounted sale.
The number of properties on the market for sale are significantly down as there continues to be a disconnect between buyer and seller pricing expectations. For sellers who had no immediate need to sell, the choice has been to hold with the anticipation of a more stable atmosphere in the future. Overall, the number of qualified bids received during a typical process is down significantly today as smaller pools of qualified investors consider fewer quality offerings.
Is there a specific area of investments more challenged than others?
The most extreme change has occurred in what we term ‘value-add’ transactions where certain assumptions are made to forecast potential future income and subsequent future value. Such assumptions in this sector became increasing more aggressive and with that came increased risk. As an example, lenders are now repricing that risk in a number of ways, such as no longer giving credit for vacant space and discounting the assumptions that a property can be leased up quickly and at market or better rates. The result is that we have seen lenders either significantly alter the terms of their debt offering or in some cases pull their bid completely.
How have private and institutional investors fared in this current investment climate?
Without question, the result is that leveraged buyers are struggling most. This group is primarily comprised of domestic high-net-worth individuals, syndications and entrepreneurial firms that utilize various sources of opportunity funds for acquisitions. More disciplined underwriting requirements that require higher equity participation, lower loan-to-value ratios, higher interest rates, and less favorable amortization periods have resulted in less proceeds and, bottom line, lower leveraged returns.
So who has the capacity to buy today? While the private leveraged buyers are still active, it is the institutional buyers that can leverage their ability to get the deal done without debt and have again come forward. These buyers have substantial resources, a desire for quality, a longer-term view of investing and an underwriting process that is geared for today’s investment climate. We are back to the basics!
DALE PETERSON is a Senior Vice President, Investment Properties Group, with CB Richard Ellis. Reach him at (813) 383-3711 or firstname.lastname@example.org.
When Gary L. Sasso became president and CEO of CarltonFields P.A. in February 2006, he learned a quick lesson in his firstfew months leading the law firm.
“When I started this job, there were a couple of occasionswhere I expected my colleagues to rally around an idea I hadbased simply on the elegance of the idea without really taking thetime or the trouble to walk them through all the steps that it tookme to get there,” says Sasso, who has been with Carlton FieldsP.A. since 1987. “I had a wake-up call that people weren’t simplygoing to love the idea because I thought it was a great idea.”
Sasso learned to involve people sooner in a discussion, and thenbroaden that circle, if necessary.
“Because, even if it’s a great idea, particularly lawyers have a lot ofskepticism about any idea,” he says. “You have to take some time andtrouble to make sure people have all the facts so they understand thenecessity for perhaps a change and come to some agreement that thisstrategy is a good one.”
Yet, in order to get honest opinions out of his employees from thesediscussions, Sasso needs to create an open environment and doesthat by setting the tone with his actions.
“I really don’t ask people to let their guard down,” he says. “What Ido is I let my guard down. I’m very open with people, and I tell themwhat’s on my mind. I give them the facts, and I hope they will respondin kind, but I don’t ask people to trust me because I don’t feel I couldask people to do that. I feel I have to earn it. I think I can earn it byshowing them that I am treating them with that same respect.”
Sasso suggests starting small to develop a comfort level with sharing information that will eventually build up trust and respect.
“I would say, first, try it out on a close circle of confidants in thefirm,” he says. “Try it out with people you feel comfortable with or thatyou trust, and see how it is, see how it feels. Then extend that circleuntil eventually you include everyone in the organization.”
Since becoming president and CEO, the company has grown in bothrevenue and employee numbers. The firm increased from 575 employees at the end of 2006 to 594 at the end of 2007 and 612 as of April of thisyear. Revenue jumped from approximately $109 million in 2006 to morethan $125 million 2007.
Sasso says he couldn’t delegate or lead change without letting hisguard down and hearing other’s opinions.
“I just couldn’t do this job any other way,” he says. “Again, it’s a matter of making the decision that I make better decisions because I amgetting better input. It’s also a matter of making sure that people arebehind those decisions and will execute, that we’re rowing togetheras a firm, and I’m not out there rowing by myself. We’re not going toget very far if I’m rowing myself. I think that’s crucial for me and that’scrucial for the firm.”
Here’s how Sasso used the ability to let his guard down to maximizedelegation and lead change.
Don’t try to do it all yourself
Sasso says it’s not hard for him to delegate a task.
“I have to delegate everything I can delegate because there are manythings I can’t delegate, so I have my hands full doing those things,” hesays.
“It’s easy to identify the things that only I can handle, at least in a lawfirm, because all of our attorneys are busy practicing law. Only I amcharged with dealing with a lot of the big-picture issues that our firmhas to confront. I can’t delegate those issues, which involve issues ofstrategy or positioning the firm, and that takes up an awful lot of mytime issues relating to our growth. Other attorneys in the firm, andreally most managers in the firm, have a full plate dealing with otherissues, and I have to free up my time to deal with those matters thatno one else is dealing with. I will delegate everything I can that mightotherwise fall on my plate, as long as somebody else in the firm is ableto handle those responsibilities well.”
If you are having trouble delegating work to those around you,Sasso recommends lining up your priorities and being honest withyourself.
“I would suggest making a list of the most important things that person has to address in order, and then being very honest about howmany of those things you can reasonably do,” he says. “Chances areyou are not going to get very far down that list. You have to delegateeverything else. You get tempted all the time to do things that otherpeople can do or should do or can do better, and you have to resistthat temptation.”
Sasso tries to spend most of his time supporting the organization’sstrongest practices and dealing with the organization’s greatest opportunities.
“But I obviously care about all of our attorneys and all of our practice groups and do try to be aware of what’s going on throughout thefirm,” he says. “Some of our practice groups just have a lot more activity and provide more opportunity and also warrant more attention.”
Even though Sasso has no problem delegating work to allow him tofocus on big-picture ideas, he does monitor what he delegates.
“I do try to monitor what is happening throughout the firm,” hesays. “We have regular managers meetings, and I will talk to peoplethroughout the firm from time to time to make sure I have a senseof how they’re doing and how our different practice groups and different offices and functions are doing.”
Sasso says he has stepped over the line and may have gotten tooinvolved in a situation where he delegated, but that’s when lettinghis guard down comes into play. Those around him are free to tellhim when he is interfering.
“I always encourage others in the firm to be honest with me,” hesays. “I will ask them as we are working on matters togetherabout whether I’m being helpful or whether I am interfering.
“I have frequent discussions with our managers about what rolesthey can play and what roles I should play. So, we try to keep fairly open communication about that. “Nonetheless, I’m sure thereare occasions where others feel I am stepping on their toes andsome occasions where others feel I am not helping enough.”
While not everyone may let Sasso know if he is meddling too
much, he realizes that if he focuses on his priority list, those jobswill keep him busy.
“I’m sure there are some occasions where people feel uncomfortable raising that with me,” he says. “But most of this is takencare of simply by the dictates of time. There’s only so much I cando. So, there’s only so much I can meddle in what other people do.”
Overall, delegating responsibilities and allowing employees tohave input on ideas has helped make Sasso’s job easier and hashelped the organization grow.
“These lawyers and key staff people really help grow the firm,help make sure we provide the best possible service to our clients,help us identify and seize opportunities,” he says. “These peopleare self-starters; they provide a lot of input into decisions that wemake as a firm. If I try to map out all by myself where we’re goingas a firm and what we’re doing as a firm, I might come up withsome good ideas. But, it never fails to be the case that when I pulltogether some of our top people on any issue we are dealing with,we come out with a better decision than I would make alone.”
Roll with t he changes
Staying on top of the changes in your industry is a key to long-termgrowth.
“Our profession is changing quite a bit. What the law firm looks liketoday is changing quite a bit. How our clients use legal services ischanging quite a bit. So, there’s a part of this that just involves observation and analysis of what is happening around us. Then part of itinvolves deciding what we are going to do about that.”
To identify what changes need to be made in the firm, Sasso observeswhat is taking place in the marketplace. The organization turns to legaltrade publications to find out what other firms are doing across thecountry.
After soaking in all the changes and ideas being talked about andpracticed across the country, the firm deciphers between the ideasthey feel are fads and ideas they feel will stick around for a while. Theytalk with clients, and if they are hearing the same opinions fromclients, they know that change is something they need to focus on.
“For example, we know that clients want to have depth in areaswhere they have legal needs,” he says. “That’s pretty obvious from justus talking to clients. So, we built depth in key areas where our clientshave legal needs. We know that clients, in some cases, like us to collaborate with them on cost control. That becomes evident, we talk tothem, they tell us their concerns, and we will deal with that. We knowthat’s not a trend because we know it’s very important to our clients.We know it’s not a flash in the pan.”
Sasso then has to get employees to buy in to the change. “There is a temptation to do something a certain way becausewe’ve always done it that way. And there is a natural reticence bypeople to make changes because people feel comfortable aboutwhat they’ve done before,” he says.
Sasso and his team make a case for the change, which involves talking to people inside the firm who are involved in that change.
“It could be a problem, it could be a concern, it could be a perceivedopportunity,” he says. “We may debate it and talk about differentapproaches or solutions, and then typically I will process all of thatand come back to that group with either a summary of what we talkedabout or perhaps a conclusion of my own that comes out of that discussion.
“I’ve found when people understand all the facts, they generally willembrace the need for change and the strategy for change.”
Sasso says you can always sense when there is unease with a change.If there is unease, he is open to hearing about it and willing to discuss any problems employees may have.
However, it’s no coincidence that because Sasso welcomes open communication, he can’t recall an employee not getting on board for a change.If you don’t involve others in the change process, but instead make thedecision all on your own, you might run into that problem.
“That can be very, very dangerous to make decisions that waybecause ultimately we really need the people in the firm to be behindwhat we decide or it’s not going to be reality,” he says. “Any organization depends on planning and execution. You can have great planning,but if you don’t have the execution, you are going to fall flat on our face.The people who execute are all the employees in the organization. Ifthey don’t buy in with what you’re doing, it’s not going to happen.”
HOW TO REACH: Carlton Fields P.A., (813) 223-7000 or www.carltonfields.com